Plunging Stallion Values Deflate Yearling Buyers' Dreams

Anyone who goes shopping for a yearling colt has a dream. For many buyers, winning the Kentucky Derby (gr. I) or another big race is the ultimate fantasy. They also think about the riches that might follow if a lucrative stallion deal can be hammered out following that victory.

In 2000, Coolmore Stud acquired the breeding rights to Derby winner Fusaichi Pegasus in a transaction that the operation's spokesman, Richard Henry, said was a record for a stallion. He didn't offer any details, but there were reports that it was worth upwards of $70 million for a horse that had been purchased for $4 million as a yearling. The previous record was the $40-million deal involving Shareef Dancer in 1983.

Unfortunately, recent economic woes within and outside the Thoroughbred industry have significantly reduced the amounts racehorse owners can expect for top stallion prospects. That's one reason why we'renot seeing nearly as many young horses sold for $1 million as we did in the past, according to Peter Bradley of Bradley Thoroughbred Brokerage in Lexington.

"The chance of a home run to get out of your cost of buying yearlings has just about gone by the wayside," he said. "The fact is that the values for stallions have probably decreased more than any values in the marketplace.

"For a Kentucky Derby winner with a good family, you basically used to be able to get $8 million to $10 million for him as a stallion. Now, I would be hard pressed to believe you get half that unless you had one ofthose super elite horses that comes along every five years or so. Those used tobe worth $20 million as stallions. You would be lucky to get $15 million forone now and $10 million is probably the real ceiling on those horses."

The falling value of stallion prospects isn't good news for yearling shoppers. Even in the best of times, they didn't find it easy to turn a profit with racing stable. But every once in a while, if they were smart and very lucky, a yearling purchase would race and excite breeders enough that his buyer could recoup a big chunk of his expenses as Robert Lewis did on several occasions.

It's a different situation in 2011.

"Not only are they (the people who race sale yearlings) not making money, there is no winning lottery ticket when they get it completely right," Bradley said. "It's got to take away from their incentive somewhat to spend money on yearlings."

On top of that, purses in this country have gone down, making it even more difficult for buyers to justify spending seven-figure prices for racing prospects.